East Fork Funding LLC v. U.S. Bank N.A. is a NY Real Property Actions and Proceedings Law (“RPAPL”) §1501(4) “quiet title” action commenced by a corporate property owner to cancel and discharge a Queens County mortgage based on the alleged expiration of the six-year statute of limitations to foreclose the mortgage. The “quiet title” action was commenced in the United States District Court for the Eastern District of New York based on the “diversity jurisdiction” statute.

The determination whether the limitations period elapsed is predicated on whether the mortgagee revoked prior elections to accelerate via the voluntary discontinuance of prior foreclosures. The mortgagee, relying on Freedom Mortgage Corp. v. Engel, argued the statute of limitations did not expire because the acceleration was timely revoked via two discontinuances. The property owner argued that the Foreclosure Abuse Prevention Act (“FAPA”) statutory amendments to CPLR §203(h) and §3217(e) abrogated Engel and retroactively nullified the mortgagee’s prior unilateral acts to revoke acceleration. Both discontinuances were taken before FAPA became effective on December 30, 2022.

The District Court ruled in favor of the property owner on its motion for summary judgment, holding that, according to FAPA, the voluntary discontinuances did not reset the six-year statute of limitations or revoke the prior elections to acceleration. The mortgagee took an appeal to the United States Court of Appeals for the Second Circuit. To determine the appeal, it is necessary for the federal appellate court to determine whether and to what extent FAPA applies retroactively to voluntary discontinuances that pre-date FAPA’s effective date. There is no precedent controlling this issue of law from New York’s highest appellate court, the Court of Appeals.

Under circumstances where there is no controlling precedent on an issue of New York law that is necessary to determine an appeal, the Court of Appeals and Second Circuit rules permit the Circuit Court to certify a “determinative question of New York law” to the Court of Appeals for the resolution of the dispositive question.

On October 1, 2024, the Circuit Court certified the question of whether FAPA’s CPLR §203(h) and/or §3217(e) apply to a unilateral voluntary discontinuance taken prior to FAPA’s enactment to the New York Court of Appeals. The Court of Appeals will set a briefing schedule for the parties to address the certified question. Interested non-parties may move for permission to appear as amicus curiae to opine on the certified question. The Court of Appeals will ultimately issue an opinion answering the certified question, which should provide finality on the extent to which CPLR §203(h) and/or §3217(e) apply retroactively. Depending on the scope of the opinion, it may also resolve the issue of the extent to which other FAPA amendments apply retroactively.

Friedman Vartolo LLP will continue to monitor the appeal’s status closely and provide updates. Please contact us if you have any questions.